Advisers put a green thumb on their businesses

Environmentally friendly methods extend beyond the portfolio

Aug 4, 2014 @ 12:48 pm

By Alessandra Malito

Jim Koch, an investment manager at Koch Capital Management in Alamo, Calif., decided to go paperless years ago. By giving up the reams of paper he once used and instead sending his documents to a web-based server in the cloud, he has been able to stay better organized, save money and actually improve client relationships.

“The client benefits,” Mr. Koch said. “You can potentially give them a better price deal and still be profitable on your end.”

It took 18 months for Mr. Koch to go paperless, and he estimates it saves him $20,000 a year with less paper used, lower postage costs and all the procedures that go along with efficiently operating a business like this.

(Don't miss how tech expert and InvestmentNews blogger Sheryl Rowling went paperless)

In addition to reducing overhead costs, the transition has given him more time to work on client relationships.

“I think that's one of the biggest internal benefits of going green and using primarily the cloud,” Mr. Koch said.

Along with cutting back on paper, Mr. Koch talks with clients and colleagues on Google hangouts and is looking to introduce Google Chromebook into his business, a device that would allow clients to see reports and financial plans through the Internet.

While Mr. Koch does not do environmental investing in particular, he and many other financial advisers have adopted green strategies for their businesses, like going paperless or working from home to save on gasoline, and they do so for a variety of reasons.

Some are going green to cut costs, others want to market themselves to an environmentally conscious client niche and some just believe it is better for the world around them.

“It's a process,” Mr. Koch said. “It took a long time, but having said that, once you're up and operating, it so significantly reduces your overhead, which flows through to your bottom line.”

Some financial advisers with a green business also participate in socially responsible investing and investments that pass environmental, social and governance screens when making selections for portfolios.

According to US SIF, the forum for sustainable and responsible investment, SRI assets in the U.S. totaled $3.74 trillion at the start of 2012, the most recent data available. That figure equated to about 11.3% of all U.S. assets under management, US SIF reported.

But financial advisers' businesses weren't always green. Jan Bryan, an SRI adviser in Prescott, Ariz., started working out of a home office in 1996, a strategy that cuts commuting time, car pollution and rent for an office.

“Before I would have said, forget it, no way, that's not professional,” Ms. Bryan said. “But as rent started going sky high — I had a nice office space in the financial district of Phoenix — I just thought this money would be better spent on my business.”

And, she added, it helped bring her closer to her clients.


“I realized that my type of client does not care about the premium office space — in fact, that could be a negative to most of my clients,” said Ms. Bryan, who has also been digitizing her old client information in an effort to go paperless. “They want to see that I am committed to the environment and social governance issues. They don't want to see excess, they want to know I share a number of their values.”

On the investing side, Mark Stempel, a financial adviser at Encore Wealth Advisors in San Rafael, Calif., started a new business for socially responsible investors after selling his family practice a few years ago.

“It's more about looking at where clients are wanting to make an impact,” Mr. Stempel said. “For me right now, it's much more about recognizing the environmental crisis that we're in on the planet and wanting to use my skills to make a difference. One way of doing that for me is to help people align their capital with what their values are.”

Of course, moving investments from major companies that don't fit the ESG criteria may not bring those companies down, but Mr. Stempel said “it definitely creates awareness about it, which is really what we're trying to do.”

And many of the clients he and other similarly aligned advisers see are younger and demand such service.

“The next generation, who is going to be inheriting a lot of wealth from baby boomers, their values are definitely more along these lines; it's almost automatic,” said Michael Kramer, managing partner and director of social research at Natural Investments, in independent advisory firm with offices around the country.

But, Mr. Koch warns, an office going green isn't for every client. He said his first clients, a couple he did retirement planning for, split with his firm a month ago after the shift away from paper. Problems with downloading, confusion with the cloud and a preference for hard copy documents made the move to digital difficult for them.

“They're going to be much better off with a traditional adviser who can generate paper reports and all that,” Mr. Koch said. “It's definitely not for everybody.”


How are you going green?

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